Chinese domestic silicon refineries have increased their offer prices after meeting at an industrial event in early April since when there has been firm demand from exporters eager to stave off any risk in higher prices in the near term.

A new round of Chinese environmental inspections has stoked fears that output in major Chinese APT production hub Jiangxi province will be constricted, adding to the scarcity in the flow of material heading to Europe.

Current and historical monthly crude steel and stainless steel production data by country.

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Amy Bennett

Amy joined Metal Bulletin Research (MBR) in 1997. Amy has direct responsibility for MBRs research into the global ferro-alloys sector and North American steel markets. She is MBRs principal consultant, with overall editorial responsibility for MBRs steel monthlies, as well as for MBRs long-term projections for the ferro-alloy and North American steel sectors. In addition, she has presented papers at all the leading steel and ferro-alloy conferences including those held by Metal Bulletin and AMM, the ICDA, IMnI, Infacon, and the Institute for Supply Management Steel Buyers Forum.

After graduating from the Pennsylvania State University with a BS in Mineral Economics, Amy joined Resource Strategies, Inc. as a Research and Marketing Analyst, focusing on the bulk ferro-alloy and steelmaking raw materials industries. She then joined CRU International as a Metals Consultant, continuing to build expertise in the steel and ferro-alloys sector before joining MBR.

Market Brief

Ferro-alloys are alloys of iron and other elements such as vanadium, molybdenum or silicon. They are primarily used in the production of carbon and stainless steel to add elements into molten metal during the steelmaking process. Thus, the main demand driver for ferro-alloys is global steel production levels.

Ferro-alloys are employed either to impart distinctive qualities into steel and cast iron, or they serve important functions during the production process. For example, ferro-chrome is what prevents stainless steel from rusting, and ferro-nickel improves the formability of steel, making it easy to form and mould into various shapes. This is particularly important for stainless steel as it is often heavily manipulated, for example into pots, pans and kitchen sinks.

The leading ferro-alloy producing countries in 2011 were, in decreasing order of production, China (57%), South Africa (10%), India (6%), Russia (4%), and Kazakhstan (4%). These countries accounted for 81% of world ferroalloy production. This is illustrated in the graph.

Ferro-molybdenum

Molybdenite ore production is focused on six countries. Chile, China and the USA account for around 80% of global molybdenite ore production, and Canada Mexico and Peru supply an additional 15%.

The demand for ferro-molybdenum is driven by stainless steel (316 stainless is the main molybdenum grade), as well as alloy steel production, and tube and pipe is a big market for ferro-molybdenum too.

The key ferro-molybdenum issues are the Chinese trade position, and increasing by-product supply. The Chinese are swing importers/exporters depending on prices. Traditionally, if FeMo prices are less than $13-14/lb, the Chinese are significant net importers. If prices go above $14/lb, then the Chinese are significant net exporters as their production costs are around the $13-14/lb level. However, were seeing at the moment that the Chinese waited until prices fell to $10-11/lb before jumping back in to import.

The other issue is that molybdenum supply has been rising, and will continue to rise, with little regard to molybdenum demand levels as it is produced as a by-product of copper production. With copper prices and demand having doing so well over the past few years, copper mining is rising, and with it, ferro-molybdenum output is rising too. This supply, in addition to Chinese supply, will cap ferro-molybdenum prices for the foreseeable future and ensure there is plenty of the material around.

Ferro-vanadium

The steel industry accounts for around 92% of vanadium consumption. Tool, high speed and high alloy steels contain around 20% vanadium, and high strength low alloy (HSLA) steel contains less than 0.5% vanadium. Around 4% of annual vanadium production is as a titanium alloy for aerospace and industrial purposes. This alloy Ti6-4 (4% vanadium) is the workhorse titanium alloy used in aerospace applications. The main demand drivers for ferro-vanadium are global steel production rates and the vanadium consumption rate used within the steel industry.

The main vanadium raw material is referred to as vanadium pentoxide. Vanadium can either be derived from mined ore, from steelmaking slags, or from petroleum residues. The leading vanadium-producing nations remained China, Russia, and South africa. Japan and the United States were thought to be the only countries to recover significant quantities of vanadium from petroleum residues.

Ferro-chrome

Ferro-chrome is produced from chrome ore which is primarily smelted in electric arc furnaces. The top chrome ore producers are South Africa, India and Kazakhstan. Whereas since Chinas surge in stainless steel output, ferro-chrome production is highest in South Africa, Kazakhstan and China.

The main exports of ferro-chrome to China are referred to as charge chrome, and the alloy is also known as ferrochromium.All stainless steel contains ferro-chrome, as it prevents steel from rusting. Typically ferro-chrome makes up 16-18% of the chemical composition of stainless steel. The European ferro-chrome price contract is negotiated on a quarterly basis between ferro-chrome producers in South Africa and European stainless mills.

To put the price of ferro-chrome into perspective, ferro-chrome costs about $2,500/tonne at the moment, with stainless steel costing about $3,000/tonne. This compares to about $600-800/tonne for standard carbon steel products. Thus, stainless steel is generally higher-value stuff and as such is only used where conditions demand it i.e. in conditions that would see carbon steel rust very easily. As a result it is also a much smaller market. While total global steel production amounts to about 1.5 billion tonnes, stainless steel is just 35 million tonnes.

Ferro-manganese

China and South Africa are the leading manganese ore producers. The countries with the highest ferro-manganese production levels are (in descending order) China, India, Ukraine, South Africa and the Republic of Korea.

Ferro-manganese is crucial to the steelmaking process due to its sulphur-fixing, deoxidising and alloying properties. Manganese is also a key component of widely used aluminium alloys and is used in oxide form in dry cell batteries.

Ferromanganese prices tend to change in response to changes in demand by the steel industries. Manganese ferroalloy prices are also influenced by changes in the product mix of the worlds suppliers because different manganese ferroalloys are largely interchangeable with each other.

Ferro-silicon

Silicon is rarely found free in nature. It is a light chemical element with both metallic and non-metallic properties. It combines with oxygen and other elements to form silicates, which comprise more than 25% of the earths crust. Silica as quartz or quartzite is used to produce ferro-silicon . Around 70% of these silicon ferroalloys are used in the iron and steel industries. Ferro-silicon can be substituted for metallurgical-grade silicon carbide, especially in iron foundries.

The leading ferro-silicon producing countries are (in decreasing order of ferro-silicon production) China, Russia, Norway, and Ukraine; they accounted for over 85% of total ferro-silicon production.In decreasing order of consumption, Europe, other Asian countries (excluding China, Japan, and North Korea), and Japan account for roughly around 73% of ferro-silicon consumption.

Ferro-titanium

Ferrotitanium is usually produced by induction melting of titanium scrap with iron or steel, but may be produced through the aluminothermic reduction of ilmenite. The two standard grades of ferrotitanium that are normally produced contain 40% and 70% titanium. A significant quantity of titanium in the form of ferrotitanium, scrap, and sponge is consumed in the steel and nonferrous alloy industries.

In the steelmaking process, ferro-titanium is used for deoxidation, grain-size control, and controlling and stabilizing carbon and nitrogen content. Interstitialfree, stainless, and high-strength low-alloy steels include ferro-titanium in high proportions.

Ferro-tungsten

World ferro-tungsten production is dominated by China. In 2011 Chinese production of ferro-tungsten increased by 11% year-on-year while ferro-tungsten exports decreased by 23% year-on-year, highlighting increasing Chinese ferro-tungsten demand.

Tungsten has a wide variety of commercial, industrial, and military applications. The leading use is as tungsten carbide in cemented carbides, which are wear-resistant materials used by the construction, metalworking, mining, and oil and gas drilling industries. Pure or doped tungsten metal contacts, electrodes, and wires are used in electrical, electronic, heating, lighting, and welding applications.

Tungsten is also used to make alloys such as ferro-tungsten and composites to substitute for lead in ammunition and other products; heavy-metal alloys for armaments, heat sinks, radiation shielding, and weights and counterweights; superalloys for turbine engine parts; tool steels; and wear resistant alloy parts and coatings. Tungsten chemicals are used to make catalysts, corrosion-resistant coatings, dyes and pigments, fire-resistant compounds, lubricants, phosphors, and semiconductors.